FTSE declines as trade threats continue

Stock markets across Europe are heading towards the end of the week on a lower note with the FTSE trading down almost 0.5%. 

A brief burst of optimism that China and the US may find a negotiated solution to their trade imbalances was snuffed out Wednesday after the Sino-American talks which started this week hit the rocks. 

Now President Trump is proposing that the US should hike tariffs on Chinese goods to 25%, up from the 10% initially suggested by US negotiators. 

The proposal will likely be put to industry leaders over the coming weeks and a final decision is unlikely to be reached before September. 

Nevertheless, the markets took note and started bidding down stocks and commodities that are likely to be affected if the higher tariffs on China are accepted. 

Miners plunge on Rio Tinto results and trade talks 

As usual, miners ended up in the cross hairs of the US-China trade shoot out with all of the top seven biggest fallers in the FTSE 100 this morning being mining and metal trading companies. Their already fragile situation was not helped as Rio Tinto reported that both its first half profits and dividends came in below expectations.

Shares in the Anglo Australian miner fell nearly 3% in Australian trading but recovered slightly to only 2.6% lower after London opened. 

BoE rate meeting expected to end with rate hike decision 

The pound is losing ground against the dollar and to a lesser extent the euro this morning ahead of the Bank of England meeting which could end up with a decision to raise interest rates to 0.75%. 

The decision is unlikely to be straight forward as it takes place against a backdrop of uncertainty in Brexit negotiations and among mixed macro-economic signals. 

BoE officials have already indicated that Britain’s economy is at risk of overheating unless borrowing slows down but also said that a failure to reach a deal on Brexit would create complete uncertainty over future rates moves.